European Office Market: Demand for High-Quality Space Reaches Record Levels

• 52% of all office space leased in 2025 was Grade A, the highest share ever recorded
• 20 consecutive quarters of positive rental growth across Europe
• Vacancy in Grade A buildings fell to 3.5%, signalling sustained pressure on prime supply
• Office investment gains momentum, reaching €52 billion, up 14% compared to 2024
• Construction activity dropped to its lowest level since 2016


The European office market continues to be driven by growing demand for high-quality space in central locations and an increasingly constrained supply, according to the latest European Office Update report by Cushman & Wakefield.

In 2025, Grade A offices accounted for 52% of all leasing activity across the EMEA region, a record high. Prime rents increased for the 20th consecutive quarter, while the vacancy rate in Grade A buildings declined to 3.5%, reflecting occupiers’ strong preference for modern, efficient and well-located space. At the same time, the pipeline of new developments fell to its lowest level since 2016, intensifying competition among occupiers and creating new opportunities for investors.

“Quality has become the primary criterion for occupiers across Europe, which is restricting the availability of space with high specifications. At the same time, we are seeing investors return, supported by improved liquidity and consistent growth in prime rents,” says Javier Bernades, Head of Offices, EMEA at Cushman & Wakefield.

Office take-up across Europe reached 10.5 million sq m in 2025, with Central Business Districts (CBDs) accounting for 67% of total activity, reinforcing the value of centrality, connectivity and access to services. Prime rents increased by 4.6% year-on-year, led by the UK and France. In Lisbon, prime rents on Avenida da Liberdade rose by 5.3% compared to the previous year.

Development activity continued to slow, with office space under construction falling to 10.1 million sq m, the lowest level since 2016. High construction and financing costs have limited new projects, resulting in a reduced pipeline and higher levels of pre-letting.

According to Pedro Salema Garção, Partner and Head of Offices at Cushman & Wakefield Portugal, “Lisbon is clearly following European trends, with increased pressure on rents and very strong demand for high-quality projects in central locations. Although around 300,000 sq m are currently under construction, most projects are only expected to enter the market from 2027 onwards, with 37% already pre-let.”

Office investment totalled €52 billion in 2025, representing a 14% increase year-on-year, supported by a gradual recovery in liquidity and prime yield compression for the sixth consecutive quarter. Outlooks point to continued rental growth in 2026 and 2027, albeit at a more moderate pace, in a context where the limited supply of high-quality office space will remain the market’s main challenge.